In a glass-walled conference room at the California headquarters of Space Exploration Technologies Corp., Chief Executive Officer Elon Musk told Texas officials he was interested in building the world’s first commercial rocket launchpad in their state -- if the state could compete.
In the months after the 2011 meeting, state and local officials gave Musk, a billionaire, what he and his lobbyists sought: about $20 million of financial incentives, laws changed to close a public beach during launches and legal protection from noise complaints. SpaceX, as the company is known, hasn’t said whether the Texas site, near Brownsville, the poorest metropolitan area in the nation, will be selected over locations in Florida, Georgia and Puerto Rico.
State and local governments often fall into bidding wars for jobs, offering tax breaks and sweeteners amounting to $70 billion annually, according to Kenneth Thomas, a political science professor at the University of Missouri in St. Louis.
“You’ve got to make sure you’re providing what everybody else is providing for tax incentives and tax breaks,” said John Baldacci, who was governor of Maine from 2003 to 2011 and regularly received requests for tax breaks.
Three years of discussions among Texas officials and SpaceX representatives culminated with the incentive offers, according to interviews. SpaceX hired lobbyists and flew a key lawmaker to its offices. Musk gave about $12,000 in campaign contributions.
Luring Boeing
Emily Shanklin, a SpaceX spokeswoman, declined to comment on incentives. Texas officials said they’re necessary to lure jobs sought by many other states.
The state stepped up its corporate blandishments in 2003 by creating a dedicated fund. It was two years after Boeing Co. decided to locate its headquarters in Chicago instead of Dallas.
The issue of government subsidies drew national attention in January as states from California to South Carolina offered billions to land production of Boeing’s 777X aircraft. Officials in Louisiana last year agreed to as much as $257 million in incentives for Johannesburg-based Sasol Ltd. to build a plant to convert natural gas to diesel fuel and other products. Rental- car company Hertz Global Holdings Inc. agreed in 2013 to move its headquarters from New Jersey to Florida after being offered $85 million in incentives.
For Texas, the second-most-populous state, where unemployment is 6 percent and 252,400 positions were created last year, SpaceX would represent a blip in the economy.